With higher funds, states can design schemes as per need: PM Modi

New Delhi: The government has accepted the Finance Commission's recommendations for a substantial hike in share of states in central taxes and asked them to tailor make schemes as per their needs, Prime Minister Narendra Modi said on Tuesday.

In a letter to all Chief Ministers, Modi said the states are free to change Centrally Sponsored Schemes and plan the course of their development.

"The 14th Finance Commission has recommended a record increase of 10 percent in the devolution of the divisible pool of resources to states. This compares with the marginal increases made by previous Finance Commissions," he wrote.

The states share will now be 42 percent of the entire kitty as compared to 32 percent previously.

"The total devolution to states in 2015-16 will be significantly higher than in 2014-15. This naturally leaves far less money with the Central Government," Modi said according to an official statement issued here.

He said that while the Finance Commission was in favour of all state plans being met through the resources being devolved, the Centre will continue to support national priority projects like poverty elimination, MNREGA, education, health, rural development, agriculture and a few others.

"...when you (states) are flush with resources, I would like you to have a fresh look at some of the erstwhile schemes and programmes supported by the centre. States are free to continue or change these schemes and programmes as per their discretion and requirement," Modi said.

He added that with this "we are moving away from rigid centralised planning, forcing a 'One size fits all' approach on states. States have always been voicing their opposition to this philosophy for years".

Modi said the NDA government has decided to devolve maximum money to states and allowed them the required freedom to plan the course of their development, accepting the long standing concerns and long-felt lacunae in the country's planning process.

The additional 10 percent of resources being devolved will give you this freedom.

"This is all towards the fulfilment of my promise of co-operative federalism. We have decided to involve states in discussing and planning national priorities... This is our strategy to take the country to a faster and yet inclusive growth trajectory through co-operative federalism which is real and true federalism," Modi said, while drawing reference to formation of NITI Aayog.